Building a world leader through Digital Transformation
Manish Choksi, Head of Strategy and Chief Information Officer of Asian Paints – the largest paint manufacturer in India – explains how the digital revolution has transformed the company’s operations, and how he views the digital challenges as the company sets out on its ambition to become one of the top five global companies in the sector.
B.COM Unit – 4 ( CORPORATE SOCIAL RESPONSIBILITY ( CSR ).pptx
An interview with Manish Choksi Head of Strategy and Chief Information Officer of Asian Paints
1. An interview with
Manish Choksi
Head of Strategy and Chief Information
Officer of Asian Paints
Building a world leader through
Digital Transformation
Transform to the power of digital
2. Manish Choksi
Manish Choksi
The Indian
society is
experiencing a
digital revolution
with Internet
and mobile
connectivity
transforming
people’s lives
Head of Strategy and Chief Information
Officer of Asian Paints
Capgemini Consulting: Could you
describe Asian Paints and its main
strategic challenges?
Asian Paints is the largest paint
manufacturer in India, with US $1.6 billion
in turnover. Around 80% of our business is
in India and the remaining 20% is located
internationally, distributed across 20
emerging and fast-developing countries. In
India, which is the fastest growing coatings
market in the world, we currently have a
40% market share in the decorative paints
business. We also address the Industrial
and the Project markets. In India, the
company has about 120 warehouses and
10 coatings manufacturing plants. Around
20% of our products are manufactured by
outside contractors.
We face stiff competition from major
international companies in our domestic
market, notably Japanese and American, as
well as from newer players entering India.
Our competitors pursue niche strategies in
all of our key markets.
To beat this increasing competition, we
constantly need to adapt our product
portfolio to the ever-changing and
increasingly segmented market demand
by introducing new products that meet
the décor needs of the country and are
environmentally friendly as well. Another
challenge is to drive efficiency and growth
in a business spread over 120 locations,
which deals directly with 20,000 to 30,000
retailers. Keeping our manufacturing
and supply chain costs under control
is a tough challenge, given constraints
of infrastructure and logistics in India.
Finally, the company has also begun to sell
services (such as a “painted wall”) instead
of products (a can of paint, for example).
Gaining better knowledge of endcustomer preferences is a high priority for
the company, since its traditional business
model - operating largely through retailers
- has had very low levels of customer
involvement.
The aim of Asian Paints is to be in the top
five global decorative coating companies.
This will not depend on luck alone.
Digital Transformation
in India
Capgemini Consulting: How is
digital changing Indian society
and consumer behavior?
Indian society is experiencing a digital
revolution. Internet and instant mobile
connectivity have completely transformed
people’s lives, and the information divide
between urban and rural communities
is rapidly disappearing. The number of
mobile telephones in India far outstrips
the number of landline connections. Even
relatively cheap mobile devices, at US $2030, are now able to deliver an Androidtype experience to the end consumer.
More people access social networks,
such as Facebook or Twitter, from their
mobile devices than from their desktops.
This is true across all age groups and
demographics, and particularly among
the under-25 age group that has grown up
with this technology. But the phenomenon
is actually much broader. Take what
is happening in our rural areas, where
we see farmers leveraging their mobile
devices to access real-time market prices
for their crops in several Indian markets,
and therefore optimizing their income.
Capgemini Consulting: How is this
digital phenomenon transforming
business practices in India?
Digital is not only shaping people’s lives,
but also driving Indian GDP growth.
Similar to many Western companies,
most Indian firms have recognized the
need to invest in digital in order to
transform their operations. Substantial
strides are being made in investments,
although the pace depends on the
maturity of the company and the ability
of the organization to transform itself. In
comparison with other Asian countries
such as Japan, Korea or China, India’s
investment is entrepreneurial and private
sector-led rather than spearheaded by the
government. The Indian government is
trying to catch up with the private sector.
The pace of
investment in
digital will depend
on the maturity
of the company
and their ability
to transform
themselves
3. Manish Choksi
Capgemini Consulting: What
are the main roadblocks to an
economically progressive digital
society in India?
One roadblock is India’s mix of cultures
and demographics. The country’s middle
class is growing rapidly and it is here
that the digital revolution has taken a
firm hold. For the country’s mass of rural
people, however, there may be some
cultural and ideological constraints. But
as we saw earlier, even in rural areas,
our entrepreneurial culture has led
to some interesting digital initiatives.
Another potential roadblock is the poor
enforcement of legislation, as concerns
over privacy rules, for example. Finally,
there must be a lot more investment in
physical infrastructure if the country is to
live up to the expectations of its citizens.
At present, the ability of companies to
deliver products and services is severely
constrained by the poor state of India’s
infrastructure.
Digital Transformation
Waves
Capgemini Consulting: So coming
back to Asian Paints, how has the
digital revolution speeded up the
transformation and development
of your company?
Over the past decade, Asian Paints has
systematically transformed its business
with the aim of improving revenues,
customer satisfaction and internal
processes. There have been three major
waves of transformation investments.
ƒIndustrialization as a
ƒ
Foundation
In the early 2000s, as part of an effort
to reduce debt and increase internal
efficiencies, the firm implemented a
‘traditional’ enterprise-wide ERP and
advanced Supply Chain. This helped to
create an enterprise-wide platform that
was the basis for further improvements
in sales and customer processes. The
Our digital
transformation
came about in
three distinct
waves of
investment in
industrialization,
customercentricity, and
automation
change also liberated working capital
that helped fund acquisitions in emerging
markets. By 2003, we began to expand in
markets in the Middle East and Egypt, as
well as in Bangladesh and Sri Lanka. Asian
Paints became more efficient by linking
subcontractors and suppliers on a B2B
portal.
During this period, we built an extremely
strong
financial
and
operational
foundation for the company’s growth,
through continued investments, as well as
further expansion into emerging markets.
ƒA Customer-Centric Priority
ƒ
A second wave of transformation
investments was directly linked to
the possibilities provided by mobile
technology to enhance our customer
experience and our sales performance.
We centralized our order-taking process
into a single corporate call center. This
change helped the company further
improve operational efficiencies and
sustain its growth. The biggest change as
a result of centralized order taking was
in the way salespeople interacted with
retailers. Liberated from routine order
collection, our sales team was able to
focus on building stronger relationships.
To enable a more meaningful dialogue
between the sales team and each retailer,
the company provided salespeople with
vital customer data in the field using
mobile devices. A rollout of tablet devices,
which is currently underway, will further
enable the sales staff.
ƒFully Automated Plants
ƒ
Asian Paints’ digital transformation also
extended to internal production processes.
High growth in paint demand created the
need to set up new manufacturing plants
every three years. Given the size and scale
of these operations, the challenge is to
build world-class manufacturing plants.
This calls for a high degree of automation
to deliver higher labor efficiency, but
also better quality and less waste – raw
materials comprise 60% of our costs, so
control is important. In April 2010, we
opened a 200,000 ton manufacturing
plant that was almost wholly automated.
A new, fully-automated and integrated
300,000 ton plant near Pune, about 140
kilometers from Mumbai, is scheduled to
open in January 2013. The new plant will
meet the highest safety and environmental
standards. Currently, all our plants boast
zero liquid emissions, and we are working
toward our target of eliminating all solid
emissions in the near future.
Digital technology plays a key role
in powering growth and mitigating
management risk. Asian Paints has grown
at a compounded annual growth rate of
almost 17% a year over the past decade.
Digital technology
plays a key role in
powering growth
and mitigating
management risk
4. Manish Choksi
Capgemini Consulting: Being both
Head of Strategy and CIO is a
pretty unique combination. What
do you see as the main benefits it
brings to your organization?
Having a combined role as Head of
Strategy and CIO gives me a unique
understanding of what makes this business
work. From a technology perspective, our
strategy revolves around mobility, cloud,
social media, and understanding these
connections offers a better overall view
of how to drive and support Asian Paints’
digital transformation.
Bringing Consumers and
Employees on Board
Capgemini Consulting: Where do
you see the major developments in
terms of your digital transformation
over the coming years?
The next phase of our business analytics
strategy is to link up our internal metrics
and data with the world of social media.
This means looking at all the unstructured
data both within and outside the company,
either on the Web or on social platforms,
and merging them. We have already
started this journey by integrating social
platforms such as Facebook and Twitter
with our customer processes to see how
we can engage in a relationship with our
consumers. The next move will be toward
greater collaboration - trying to predict
customer demands, so that we can offer
products and services that the customer
wants. Creating proactive relationships
with our partners, retailers’ networks
and end-consumers involves building
new technological capabilities within the
Marketing and Sales teams. We are just
at the beginning of our transformation
from a product to a service company (as I
said, selling ‘painted walls’) which involves
building a new ecosystem of partners and
gathering insights from our consumers.
These large areas for investment will
require a change of mindset. The way
in which the company engages with
employees at all levels within the
hierarchy will change. Our management
team will have to be more transparent and
accountable.
We are at the
beginning of our
transformation
from a product
to a service
company - from
selling paint cans
to a painted wall